The Ontario Securities Commission (OSC) has settled with several unregistered real estate investment firms, ordering over $5 million in disgorgement, penalties and costs.
Late last week, the OSC approved two separate settlement agreements with several firms and individuals involved with offering unregistered real estate investments in Belize and the Dominican Republic.
According to the OSC, Canyon Acquisitions, LLC, and Canyon Acquisitions International, LLC along with several individuals (Brent Borland, Wayne Robbins, Marco Caruso) and various other corporations, offered investors the opportunity to acquire fractional interests in condominiums, villas, and boat slips in a number of different real estate development projects.
They marketed and sold these investments to Ontario investors through arrangements made with investment clubs known as HEIR Home Equity Investment Rewards Inc., FFI First Fruits Investments Inc., Wealth Building Mortgages Inc., and their head, Archibald Robertson.
The OSC says that while Canyon characterized these investments as real estate, they constituted investment contracts and therefore securities under Ontario laws. It says that the various companies and individuals involved with HEIR and Canyon held seminars and meetings with potential investors and/or provided promotional materials that constituted trading, or acts in furtherance of trading, of securities without registration, or an exemption.
As part of the settlements, all of the respondents admitted to breaching securities laws by trading without registration and illegally distributing those securities. They also admitted that their various breaches of securities laws were contrary to the public interest, the commission says. Additionally, the HEIR respondents admitted to advising without proper registration.
As a result, Robertson is ordered to pay an administrative penalty of $350,000, along with $150,000 towards the costs of the investigation. The firms, HEIR, FFI, and Wealth Building must also pay an administrative penalty of $1 million. They are also all permanently banned from trading and registration, and Robertson is reprimanded and permanently banned from acting as a directoror officer of a registrant, issuer or investment fund manager.
The firms and individuals associated with Canyon are also ordered to pay an administrative penalty of $350,000 and $150,000 in costs. They have also committed to pay back Ontario investors who still hold these securities. And, they are ordered to disgorge $1.67 million related to projects in Belize, and $1.5 million for projects in the Dominican; although these amounts will be offset by the amounts returned to Ontario investors who still hold securities in these projects. They are also permanently banned from trading and registration, and from becoming a director or officer.
The commission reports that, at least 480 Ontario investors purchased securities through HEIR, making a total investment of approximately $74.5 million; and the companies received more than $4.5 million in commissions on these sales, it says. The Canyon firms raised at least $24.2 million from Ontario investors, of which $17.1 million concerned investment contracts in Belize involving Caruso and his companies, it notes.